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Estonia's economic transformation

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Estonia is projected to grow by 1.8% this year and 3% in 2014, outshining most of Europe including Germany and France.

The Baltic state -- which gained independence in 1993 -- has the lowest government debt in Europe.

Estonia joined the European Union in 2004 and the eurozone -- Europe's single currency -- in 2011.

An expanding digital marketplace, financial stability and strong economic growth; Estonia is setting the pace for other European nations, according to the Baltic nation's leader.

Speaking with CNN's Isa Soares, Estonian President Toomas Hendrik Ilves said that the country developed a reputation for its digital economy "from a level playing field" with other nations after it gained independence in 1993.

"We did, in the 1990s, look around us and see a lot of things that we needed to do in the world," he said. "We were behind in many areas. When it came to IT... we were starting more or less at the same base as everyone else. We started with a tabula rasa, a clean slate."

Having emerged from the wreckage of the Soviet Union and decades under communist rule, Estonia's economy now generates 1% of its GDP [Gross Domestic Product] from IT solutions, according to Ilves.

He added: "Our e-governance solution, banking, private sector... are more secure and quicker."

With the lowest government debt in Europe, Estonia's economy is also a beacon for financial prudence at a time when many European nations are struggling to cope with high government debt and low growth.

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He added: "It is quite clear that if the eurozone is to be viable, that the kinds of behavior that we have seen, either fiscal irresponsibility, or in some cases even lying about deficits, well that is completely unacceptable."

A fully-fledged member of the European Union since 2004 and the latest country to officially adopt the euro currency in 2011, Estonia's dark days 19% high unemployment and grave recession appear to be at an end.

Allan Sikk, an expert in Eastern Europe at the University College of London, said that Estonia's meteoric rise and assimilation into the West is partly due to the country emerging from the Soviet Union with a stronger economy than most of its counterparts.

"It was also close to some very rich countries like Finland and Sweden that provided export markets and investments."

Today, the Baltic nation is joining its affluent Nordic partners in financing the struggling countries of southern Europe.

A state of affairs that according to Ilves, is politically "tough" to justify when a "relatively poor country" like Estonia is bailing out richer nations that "have not been following the rules."

But Ilves is hopeful that Europe's single currency area has emerged from the "worst phase."

"It will be a slow recovery, we won't be back to the go-go years of booming economies yet," he added, "but if you look at our country and other countries that started the reforms early, they're doing better [and] growth is faster... so that's the proof."